Politics, Geopolitics & Conflict
The purported U.S. intelligence leaks that were mysteriously been floating around social media for a month (possibly longer) before being detected speak volumes in one particular area: Relations between Moscow and the power centers of the MENA region. Keeping in mind that the alleged intel may or may not be real, though the Pentagon is conducting an investigation into the leaks and the FBI has arrested a subject, the MENA-related “classified” intelligence paints a picture of the U.S. losing major ground in the Middle East, which is quietly backing Putin. First, we have U.S. ally Egypt, which the alleged intelligence claims was secretly planning to supply Russia with tens of thousands of rockets, gunpowder, and artillery. There are no indications that any of these arms deals went through in the end (according to the Pentagon), but the “why” behind their consideration is interesting in itself. This is all tied to Libya. Before Russia invaded Ukraine, Egypt, Russia, and the U.S. were largely on the same “side” in the Libyan civil war. They all supported General Haftar–though the U.S. support was very quiet and indirect. Now, the new narrative in Washington is that Haftar is out because of Russia (largely), and the U.S. expects Egypt to fall in line. Instead, leaked diplomatic cables suggest that Egypt continued to inform Moscow about its talks with Washington regarding Libya. On Libya, Russia and Egypt still align–they both want Haftar…
Politics, Geopolitics & Conflict
The purported U.S. intelligence leaks that were mysteriously been floating around social media for a month (possibly longer) before being detected speak volumes in one particular area: Relations between Moscow and the power centers of the MENA region. Keeping in mind that the alleged intel may or may not be real, though the Pentagon is conducting an investigation into the leaks and the FBI has arrested a subject, the MENA-related “classified” intelligence paints a picture of the U.S. losing major ground in the Middle East, which is quietly backing Putin. First, we have U.S. ally Egypt, which the alleged intelligence claims was secretly planning to supply Russia with tens of thousands of rockets, gunpowder, and artillery. There are no indications that any of these arms deals went through in the end (according to the Pentagon), but the “why” behind their consideration is interesting in itself. This is all tied to Libya. Before Russia invaded Ukraine, Egypt, Russia, and the U.S. were largely on the same “side” in the Libyan civil war. They all supported General Haftar–though the U.S. support was very quiet and indirect. Now, the new narrative in Washington is that Haftar is out because of Russia (largely), and the U.S. expects Egypt to fall in line. Instead, leaked diplomatic cables suggest that Egypt continued to inform Moscow about its talks with Washington regarding Libya. On Libya, Russia and Egypt still align–they both want Haftar at the helm.
Belarus must be getting nervous by now. The country is seeking security guarantees from Russia after Putin pledged to turn Lukashenko’s playground into a tactical nuke station on Ukraine’s border. Hosting Russian tactical nukes is a possible win for Lukashenko (not to be confused with the national interest of Belarus) in terms of prestige and security guarantees from an internal perspective: Once it stations its tactical nukes on Belarus’ territory, Moscow will not allow anything to upset Lukashenko’s leadership. Lukashenko likely sees this as a guarantee of longevity, even if he will be controlled by Putin, who will ultimately have the power to determine any change in regime. It’s also a loss for Lukashenko because it makes Belarus a direct target for NATO.
450,000 barrels per day of oil from the Kurdistan Region of Iraq remains offline–nearly two weeks after Turkey shut down the Ceyhan export pipeline after Iraq won a claim against Ankara in an international court. A deal had already been cut between Erbil and Baghdad, in which Erbil agreed to let Iraq’s state-run SOMO oil marketer export its oil, with revenues going to a bank account controlled by Erbil. There is one theory out there that this deal could be KRG President Barzani’s downfall, assuming that the people are loyal only to Barzani’s ability to distribute oil revenues. Once he loses control of the oil, his time in power could become tenuous. The implementation of the deal that would have turned the oil pipeline back on is being held up as Turkey uses this for leverage to negotiate the settlement with Baghdad.
According to Ukrainian Naftogaz, a Hague-based international court has ordered Moscow to pay $5 billion in compensation for losses when Russia occupied Crimea in 2014.
Deals, Mergers & Acquisitions
Getting hot in the shale patch …
Things are heating up in the shale patch as Exxon begins shopping around for Permian basin assets. Reports of informal talks this week between Exxon and Pioneer Natural Resources sent Pioneer’s stock soaring, along with a nice bump for other potential targets among the shale producers (Devon, Diamondback, etc).
Diamondback (NASDAQ:FANG) said it was looking to dump its non-core assets in the Permian and was already working with a financial adviser. Diamondback has doubled its asset sale target to $1 billion.
Italy has approved the sale of Lukoil’s ISAB refinery in Sicily to G.O.I Energy–a Cypriot private equity firm. The plant is capable of refining 320,000 bpd, representing 20% of Italy’s total refining capacity. G.O.I Energy is being backed by Trafigura. Italy gave its approval with conditions–one of which requires G.O.I to guarantee oil suppose from producing countries other than Russia. Rumor has it that the U.S. was concerned about the sale due to the refinery’s location, which is just 50 kms away from the Sigonella NATO base. G.O.I Energy has denied any ties to Moscow.
Sinopec has signed a shareholding agreement with QatarEnergy to acquire a 1.25% stake in the $30B mega North Field East expansion project in the form of a 5% interest in one of the project’s LNG trains. Exxon, Total, Conoco, Eni, and Shell already have stakes in the project. The project looks to add to Qatar’s LNG export capacity by 110 million mt per year by 2026. Sinopec and Qatar already signed a 27-year deal for 4 mt/year of LNG from the North Field project.
Teck shareholders are holding out for a better deal from Glencore after Glencore offered $22.5 billion (unsolicited) last week as copper demand looks to outstrip supply until the end of this decade.
Shell received approval to sell its 27.5% stake in its Sakhalin-2 stake in Russia to Russia’s Novatek for $1.16B. Shell announced last year that it would quit its Sakhalin-2 project after Russia invaded Ukraine.
Discovery & Development
After securing a drilling permit for its 25/4-15 wildcat well in the North Sea in the Vilje field off Norway, Aker BP was successful. It is the first exploration well in production license 919. The objective was to prove petroleum in the Paleocene reservoir in the Heimdal Formation. Aker BP encountered a 31.5 meter oil column, 29 meters of which was a sandstone reservoir with good quality. The size of the discovery is between 0.5 and 0.8 million standard cubic meters of recoverable oil.
88 Energy Ltd confirmed the presence of multiple hydrocarbon bearing zones in its Hickory-1 well in its Project Phoenix program in Alaska’s North Slope, locating a new upper SFS reservoir. Wireline logging runs and sidewall coring is complete, with a flow test program planned. Wireline logging data suggests estimated net pay of 450 ft across all pay zones at depths between 7,700-10,500 ft. Gross estimated pay is more than pre-drill expectations at more than 2,000 ft.
Omega Oil and Gas saw positive results at its Canyon-2 well in Australia. The well reached a total depth of 3,807 meters. Omega says it exceeded its pre-drill expectations, intersecting 293 meters of gas.
